EFFECT OF DIASPORA REMITTANCES ON SERVICES SECTOR OF THE NIGERIAN ECONOMY

Abstract

This study investigated the effect of diaspora remittances on growth of the services sector in Nigeria. The dependent variable is services sector output while the independent variables were migrant remittances, workers’ remittances and exchange rate. The data spanned the period 1990-2022. The data were sourced from the CBN Statistical bulletin 2022 edition and the World Bank Development Indicator Data base 2022 edition. The data were analyzed using the Error Correction Model (ECM) technique. The variables were found to be stationary at first difference and co-integrated hence the adoption of the ECM technique in estimating the model parameters. The result revealed that both migrant and workers’ remittances significantly increased growth of the services sector in Nigeria for the period reviewed while exchange rate decreased growth of the services sector. The model estimated a speed of adjustment of 8.7 per cent and a model fitness of 95.8 per cent. The general conclusion is that remittances has increased output of the services sector in Nigeria but the quantum of workers’ remittances inflow to the services sector was found to be higher than that of migrant remittances. We recommended the intensification of technical exchange programmes between Nigeria and other advanced of the world which will further enhance investments in the services sector. In addition, unification of exchange rates should be pursued by the monetary authority as this will stabilize the local currency and enhance imports to the services sector especially.